By Park Jin-hai
A local private equity fund’s (PEF) planned acquisition of a controlling stake in Halla Visteon Climate Control, a major auto parts maker, is drawing protests from the union amid concerns about a possible technology leak.
Visteon, a U.S. auto parts maker which owns a 70 percent stake in Halla Visteon Climate Control, will hold a board meeting on Dec. 12 and finalize the deal to sell its stakes to Hahn & Company, a local PEF.
The U.S. automotive parts maker already signed a preliminary deal with the private equity firm to sell its entire stake in Halla Visteon for 3.5 trillion won ($3.6 billion).
Industry insiders say that the U.S. firm will likely close the deal because the suggested price is way above the estimated market value of 2.5 trillion won.
“Visteon is likely to hand over of its stake in Halla Visteon to the equity firm,” said Shin Chung-kwan, an analyst at KB Investment and Securities.
PEFs usually resell their target companies one or two years after acquisition by nature, after raking in profits.
The local auto industry is more interested in to whom the equity fund will sell its managerial control after pocketing investment gains.
The labor union of the company is also looking ahead to the sellout as well.
Denouncing the deal as a “closed-door sellout,” it delivered its demands to the U.S. company and the private equity firm on Monday.
“We are worried that a Chinese firm will take over the company from the PEF, targeting high technology,” said a unionist at the Daejeon Chapter of the Korea Metal Workers Union.
“As we know, Shanghai Automotive Industry’s affiliates are interested in the acquisition. Nothing is confirmed yet, since the deal is made behind closed doors. But we demanded that when the equity firm resells its stake, it should be to a local industrial capitalist, not a foreign one, and that it should be done through an agreement with the union,” he added.
He cited Ssangyong Motor as an example, where China’s Shanghai Automotive Industry took over the company and left it after allegedly acquiring technology from the automaker.
The union will convene Friday to vote on whether to stage collective actions against the sellout.
Ssangyong Motor was sold to Shanghai Automotive Industry in 2004 and was under court receivership in 2009, after its main investor, Shanghai Automotive, pulled out the year before. There had been allegations that the Chinese firm stole its core technology.
Halla Visteon is the world’s second-largest automotive heating, ventilation and air conditioning (HVAC) unit manufacturer, after Japan’s Denso.
It maintains a dominant position in the local market as well, taking a 50 percent market share.
“Halla Visteon supplies products to Ford and it is also an important parts manufacturer for Hyundai Motor. Thus the effects from the sellout to foreign hands would be significant. Given that parts companies are involved in the development of new cars, there are worries that the classified information for new cars could be leaked to foreign firms,” he said.
The Daejeon-based company has regional offices in 19 countries, employing some 15,000 people. The company said it is estimated to post a record $1.4 billion in received orders this year, up 17 percent from the previous year.
Halla Visteon was founded as a joint venture between Ford and Mando in 1986, but Mando sold its stake to Visteon as the Korean company struggled because of the Asian financial crisis in the late 1990s.